IMPORTANT QUESTIONS OF E BUSINESS

1,What are the Advantages of E- commerce?

Customer Insights Through Tracking And Analytics Fast Response To

Consumer Trends And Market Demand Lower CostMore Opportunities To
"Sell" Personalized Messaging

2, What is web 2.0?

Web 2.0 is the name used to the describe the second generation of the world
wide web, where it moved static HTML pages to a more interactive and
dynamic web experience. Web 2.0 is focused on the ability for people to
collaborate and share information online via social media, blogging and Web-
based communities

3, Differentiate intranet and internet?

Intranets
Corporate intranets house internal memos, corporate policy handbooks,
expense account worksheets,budgets, newsletters, and a variety of other
corporate documents.

4, Define extranet?
Extranets
• Extranets are intranets that allow certain authorized parties outside the
company to access certain parts of the information stored in the system

5, What is e-tailing?
Electronic retailing (E-tailing) is the sale of goods and services through the
Internet. E-tailing can include business-t business (B2B) and business-to-
 consumer (B2C) sales of products and services. E-tailing requires companies to
tailor their business models to capture Internet sales, which can include
building out distribution channels such as warehouses, Internet webpages, and
product shipping centers.

6, Define web Auction?

A web auction is when a consumer or business lists an item or service on the

Internet for sale to the public. The auction includes a starting price and allows
bidding by consumers who are interested in purchasing the merchandise. The
web auction can take place using a service provided by another company or
on a private website.

7, What is network security and why is it important?

According to the SANS Institute, network security is the process of taking

preventative measures to protect the underlying networking infrastructure
from unauthorized access, misuse, malfunction, modification, destruction or
improper disclosure. Implementing these measures allows computers, users
and programs to perform their permitted critical functions within a secure
environment.

1. Change your router admin username and password

2. Change the network name
3. Activate encryption
4. Double up on firewalls
5. Turn off guest networks
6. Update router firmwar

8, Define cryptography?
 Cryptography is associated with the process of converting ordinary plain text
into unintelligible text and vice-versa. It is a method of storing and
transmitting data in a particular form so that only those for whom it is
intended can read and process it. Cryptography not only protects data from
theft or alteration, but can also be used for user authentication

9, Why do consumer need protection?

Illiteracy and ignorance

Unorganised consumers
Spurious goods
Deceptive advertising
Malpractices of businessmen
. Freedom of enterprise

10, ,What is cyber law?

Cyber law is a term used to describe the legal issues related to use of
communications technology, particularly“ cyberspace”, i.e. the Internet. It is
less of a distinct field of law in the way that property or contract are, as it is
an intersection of many legal fields including intellectual property,
privacy, freedom of expression, and jurisdiction

PART-B (5 X 13 = 65 Marks)

11 a) Explain the storefront model, Auction model and Portal models of E-

business in detail?(13)
Storefront model enables merchants to sell products on the Web transaction
processing, security, online payment, information storage This is the basic
form of e-commerce where the buyer & seller interact directly.To conduct
store front e-commerce merchants need to organize an online catalog of
products, take orders

Through their Web sites, accept payments in a secure environment, send

merchandise to customers and manage customer data(such as customer
profiles).They must also market their sites to potential customers.Leading
users of store front model:B2Ccompanies.

Shopping cart technology

An order-processing technology allowing customers to accumulate lists of

items they wish to buy as they continue to shopShopping cart is supported by
Product catalog – hosted on merchant server inthe form of a database

Merchant server

the data storage and management system employed by the merchant.Database

technology – required to store andreport on large amounts of information

Online shopping Malls

Present consumers with a wide selection of productsand services.Considered

to be more convenient than searching andshopping at independent online
storefronts for severalitems.
Consumers can search and shop for a variety ofproducts, and can use mall’s
shopping cart technologyto purchase items form many stores in a
singletransaction. Often act as shopping portals (search engines),
directingtraffic to different type of companies
Online auction sites

Act as forums through which Internet users canlog-on and assume the role
of either bidder orseller. Collect a commission on every successfulauction As
a seller, you are able to post an item youwish to sell, the minimum price you
require tosell your item and a deadline to close theauction.As a bidder, you
may search the site for theavailability of the item you areVseeking, view the
current bidding activity and place a bid(bids areusually in designated
increments).Auction sites allow you to add features such asphoto graph or
description of the item’s condition

After the auction has completed the seller and bidderis notified and the method
of delivery is to work outbetween the two parties. In Auction model the site
only receive commission
on each successful sale.

3. PORTAL MODEL

Portal comes from the word “Port” point ofentry to the country so Web
Portal o EBusiness portal means Point of entering tothe Web.Portal sites give
visitors the chance to find almost everything they are looking for in
oneplaceOften offer news, sports and weather as well as ability to search the
Web

PORTAL MODEL

Horizontal portals Portals that aggregate information on abroad range of

topicsYahoo!, AltaVista, iGoogle Vertical portalsPortals that offer more
specific informationwithin a single area of interestWebMD, IMDB,
FirstGovBuying in bulk has always driven pricesdown and there are now
 Websites that allowyou to lower the price by joining with otherbuyers To
purchase products in largequantities.The word dynamic means
constantlychanging. This is opposite to static pricingmodels where everyone
pays the sameprice.

(Or)

b) (i) what are the key difference between e-commerce and e-business? (8)

BASIS FOR
E-COMMERCE E-BUSINESS
COMPARISON

Meaning Trading of merchandise, Running business using

over the internet is known the internet is known as
as E-commerce. E-business.

What is it? Subset Superset

Is it limited to Yes No
monetary
transactions?

What they carry out? Commercial transactions Business transactions

Approach Extroverted Ambiverted

Requires Website Website, CRM, ERP,

etc.
BASIS FOR
E-COMMERCE E-BUSINESS
COMPARISON

Which network is Internet Internet, Intranet and

used? Extranet.

(ii) what is mobile commerce ? Discuss the Advantages of mobile

commerce over e- commerce (5)

Use of a mobile device to:

 Purchase goods

 Purchase services

 Purchase content

 Pay via cell phone post/pre-paid account balance or via a

credit/debit card
Models M.commerce
 Business modelling Technology
Push
C

Yes
Business Yes
No
analysis
Stop

Marketing
plan

Definition and
use
of market
analysis

No
Busine
ss plan

Business Models for m-Commerce

Relevant factors for business modelling

• The following core issues for business models were identified and
defined:

• the concept for a new mobile commerce service

• the positioning of the mobile operator taking into account its strategic
advantages

• the target market, in terms of market segment and corresponding

potential
 • the relationship with other strategic business partners.

• We will start by looking at the position business modelling takes in

the development process for new products and services.

An example of a Business Model for m-Commerce : Mobile Gambling -

Usage scenario

• Betting is always time sensitive, people always want to bet just before
the match or race begins. Therefore the application has to allow quick
and easy usage.

• Users could send their bets and check their status using text-based
technologies like SMS or WAP.

• The application could be downloaded from the provider’s server to the

user’s mobile or run from where it is hosted.

An example of a Business Model for m-Commerce :Mobile Gambling -

Payment method

• The timing of payment is important because for a bet to be valid the

player should make a commitment to pay that he cannot repudiate
afterwards. The payment method will have to be quick and easy.

• Possible options for payment are

• mobile micropayment.

• subscription to the service and creation of a gambler’s account

Benefits of EDI

(prepaid or postpaid option).

12. a) Explain Benefits of EDI and internet E-commerce?

Shortened ordering time
Cutting costs
Elimination of errors
Fast response
Accurate invoicing
EDI payments
Reduced stock holding
Accelerated Cash flow
Business opportunities
Customer lock-in (retention)

EDI and Internet e-Commerce

Materials suppliers
Product Suppliers
Manufacturer Retailer
Customer

(Or)

b) discuss in details the basics of web server hardware and

software (13)

Web server basics

• Software for Web servers

• Internet utility programs

• Web server hardware

• Web site hosting alternatives

Web Server Basics

• The main job of a Web server computer is to respond

to requests from Web client computers.

• The three main elements of a Web server are the:

– Hardware

– Operating system software

– Web server software

Types of Web Sites

• An important first step in planning a Web server is todetermine what the company
wants to accomplish with the server.

• The company must estimate how many visitors will be connecting to the Web site and
what types of files will be delivered through the site.

• Companies create Web sites in a wide variety of formsincluding simple development

sites, intranets,information-only sites for customers, business-tobusiness portals,
storefronts, or content-delivery sites.

Development Sites

• The simplest Web site and the least costly to implement is a development site.

• A development site can reside on an existing PC and can be developed with low-cost
Web site building tools, such as Microsoft FrontPage or Macromedia

Dreamweaver.

• Testers can access the site through their PCs on the

existing LAN.
The Future of Dynamic Web Page

Generation

• The Apache Cocoon Project is an initiative where content is stored with XML tags that
describe the meaning of each content item.

• Instead of creating a Web page, Cocoon can produce a response tailored to the request
by applying a style sheet to the data.

• Other similar efforts are underway from Microsoft

(.NET) and Oracle.

Various Meanings of “Server”

• Server – any computer used to provide files to other computers connected to it through
a network.

• Sometimes included in that meaning, however, are:

– Server software
– Database server

– It is important to ask qualifying questions when determining what one might mean by

“server”.

Operating Systems for Web Servers

• A computer must have an operating system to run programs as well as keep track of
multiple users logged on to the system to ensure that they do not interfere with one
another.

• The most common operating systems for Web servers from Microsoft are: Windows NT
Server, Windows 2000

Advanced Server, and Microsoft .NET.

• Unix-based products are also popular: Linus, Solaris, and FreeBSD Web Server
Software

• The most popular Web server programs in use

today:

– Apache

– HTTP Server

– Microsoft Internet Information Server (IIS)

– iPlanet Enterprise Server

Microsoft Internet Information Server (IIS)

• Comes bundled with Microsoft’s Windows

2000 Server operating systems.

• Includes an integrated search engine.

• Permits administration from a remote server.

• Combines HTML pages, ActiveX components,

Remote Server Administration

• With remote server administration, a Web site administrator can control a Web site
from any

Internet-connected computer.

• Although all Web sites provide administrative controls, it is convenient for an

administrator to be able to fix the server from wherever he or she happens to be.
 13. a) What is E-mail marketing ? why should we do e-mail marketing ? Explain
the benefits and potential problems of E-mail marketing?(13)

• Sending one e-mail message to a customer can cost less than one cent if the
company already has the customer’s e-mail address
• Conversion rate
– The percentage of recipients who respond to an ad or promotion
• Opt-in e-mail
 – Practice of sending e-mail messages to people who request information on
a particular topic Technology-Enabled Customer Relationship
Management
• Clickstream
– Information that a Web site can gather about its visitors
• Technology-enabled relationship management
– Firm obtains detailed information about a customer’s behavior, buying
patterns, etc., and uses it to set prices and negotiate terms

Creating and Maintaining Brands on the Web

• Elements of branding include:

– Differentiation
 • Company must clearly distinguish its product from all others
– Relevance
• Degree to which a product offers utility to a potential customer
– Perceived value
• Key element in creating a brand that has value

Emotional Branding vs. Rational Branding

• Emotional appeals are difficult to convey on the Web

• Rational branding relies on the cognitive appeal of the specific help offered, not on
a broad emotional appeal
Affiliate Marketing Strategies
• Affiliate marketing
– One firm’s Web site includes descriptions, reviews, ratings, or other
information about a product that is linked to another firm’s site
• Affiliate site
– Obtains the benefit of the selling site’s brand in exchange for the referral
• Cause marketing
– Affiliate marketing program that benefits a charitable organization
Viral Marketing Strategies
• Relies on existing customers to tell other people about products or services they
have enjoyed using
• Example:
– Blue Mountain Arts
 • Electronic greeting card company
Purchases very little advertising, but grew rapidly

Search Engine Positioning and Domain Names

• Search engine is a Web site that helps people find things on the Web
• It has 3 major parts:
– Spider, crawler, or robot
• Program that automatically searches the Web
– Index or database
• Storage element of a search engine
– Search utility
• Uses terms provided to find Web pages that match
– Nielsen//NetRatings
– Frequently issues press releases that list the most frequently visited Web
sites
– Search engine ranking
– Weighting factors used by search engines to decide which URLs appear
first on searches
– Search engine positioning or search engine optimization
– Combined art and science of having a particular URL listed near the top of
search engine results
– Paid Search Engine Inclusion and Placement
• Paid placement
• Option of purchasing a top listing on results pages for a particular set of search
terms
• Rates vary
• Search engine placement brokers
• Companies that aggregate inclusion and placement rights on multiple search
engines

Web Site Naming Issues

• Domain names
• Companies often buy more than one
• Reason for additional domain names is to ensure that potential site visitors who
misspell the URL will still be redirected to the intended site
• Example: Yahoo! owns the name Yahow.com

•
•

(Or)

b) (i) briefly discuss about virtual community ?(5)

• Cellular-satellite communications technology can be packaged with:

 – Notebook computers
– Personal digital assistants (PDAs)
– Mobile phones
• Wireless Application Protocol (WAP)
– Allows Web pages formatted in HTML to be displayed on devices with
small screens
• Electronic marketplaces can serve people who want to buy and sell a wide range
of products and services
• AvantGo
– Provides PDAs with downloads of Web site contents, news, restaurant
reviews, and maps
• Intelligent software agents are programs that search the Web and find items for
sale that meet a buyer’s specifications
• Some software agents focus on a particular category of product
• Simon
– One of the best shopping agents currently available
• A virtual community is a gathering place for people and businesses that does not
have a physical existence
• They exist on the Internet in various forms:
– Usenet newsgroups
– Chat rooms
– Web sites
• They offer people a way to connect with each other and discuss common issues
and interests
 Mixed Revenue Portals and Virtual Communities

• Time Warner’s AOL unit

– One of the most successful Web portals
– Charges a fee to users and has always run advertising on its site
• Yahoo!
– Now charges for the Internet phone service originally offered at no cost

(ii) Explain the various types of web portal with examples (8)

Internal Web Portals

• Run on intranets
• Can save significant amounts of money by replacing the printing and distribution
of paper memos, newsletters, and other correspondence
• Can become a good way of creating a virtual community among employees

• Companies are now using the Web to operate auction sites, create virtual
communities, and serve as Web portals

• Consumer online auction business is dominated by eBay

• B2B auctions

• Give companies a new and efficient way to dispose of excess inventory

• B2B reverse auctions

• Provide an effective procurement tool

• New companies have formed that capitalize on the Web’s ability to bring together
geographically dispersed people and organizations

• Organizations are using mobile commerce to sell goods and services to users of
handheld devices

• Companies are using internal Web portals to communicate with employees

14. a).what is an E-payment system ? Explain the

characteristics of E-payment systems in details
Electronic payment, where electronic payment refers to paperless monetary transactions.
Electronic payment has revolutionized the business processing by reducing the
paperwork, transaction costs, and labor cost. Being user friendly and less time-consuming
than manual processing, it helps business organization to expand its market
reach/expansion. Listed below are some of the modes of electronic

payments −

Credit Card

Debit Card

Smart Card

E-Money

Electronic Fund Transfer (EFT)

Credit Card

Payment using credit card is one of most common mode of electronic payment. Credit
card is small

plastic card with a unique number attached with an account. It has also a magnetic strip
embedded in it which is used to read credit card via card readers. When a customer
purchases a product via credit card, credit card issuer bank pays on behalf of thecustomer
and customer has a certain time period after which he/she can pay the credit card bill. It is
usually credit card monthly payment cycle. Following are the actors in the credit card
system. The card holder − Customer

The merchant − seller of product who can accept credit card payments.

The card issuer bank − card holder's bank

The acquirer bank − the merchant's bank

The card brand − for example , visa or Mastercard.

Credit Card Payment Proces

Step Description

Step 1 Bank issues and activates a credit card to the customer on his/her request.

Step 2 The customer presents the credit card information to the merchant site or to the
merchant

from whom he/she wants to purchase a product/service.

Step 3 Merchant validates the customer's identity by asking for approval from the card
brand

company.

Step 4 Card brand company authenticates the credit card and pays the transaction by
credit.

Merchant keeps the sales slip.

Step 5 Merchant submits the sales slip to acquirer banks and gets the service charges paid
to

him/her.

Step 6 Acquirer bank requests the card brand company to clear the credit amount and gets
the

payment.

Step 6 Now the card brand company asks to clear the amount from the issuer bank and
the amount

gets transferred to the card brand company.

Debit Card

Debit card, like credit card, is a small plastic card with a unique number mapped with the
bank account number. It is required to have a bank account before getting a debit card
from the bank. The major difference between a debit card and a credit card is that in case
of payment through debit card, the amount gets deducted from the card's bank account
immediately and there should be sufficient balance in the bank account for the transaction
to get completed; whereas in case of a credit cardtransaction, there is no such
compulsion.

Debit cards free the customer to carry cash and cheques. Even merchants accept a debit
card readily. Having a restriction on the amount that can be withdrawn in a day using a
debit card helps the customerto keep a check on his/her spending.

Smart Card

Smart card is again similar to a credit card or a debit card in appearance, but it has a
smallmicroprocessor chip embedded in it. It has the capacity to store a customer’s work-
related and/or personal information. Smart cards are also used to store money and the
amount gets deducted after every transaction.

Smart cards can only be accessed using a PIN that every customer is assigned with. Smart
cards are secure, as they store information in encrypted format and are less
expensive/provides faster processing.

Mondex and Visa Cash cards are examples of smart cards.

E-Money

E-Money transactions refer to situation where payment is done over the network and the
amount gets transferred from one financial body to another financial body without any
involvement of a middleman. E-money transactions are faster, convenient, and saves a lot
of time. Online payments done via credit cards, debit cards, or smart cards are examples
of emoney transactions. Another popular example is e-cash. In case of e-cash, both
customer and merchant have tosign up with the bank or company issuing e-cash.

Electronic Fund Transfer

It is a very popular electronic payment method to transfer money from one bank account
to another bank account. Accounts can be in the same bank or different banks. Fund
transfer can be done using

ATM (Automated Teller Machine) or using a computer.

Nowadays, internet-based EFT is getting popular. In this case, a customer uses the
website provided by the bank, logs in to the bank's website and registers another bank
account. He/she then places arequest to transfer certain amount to that account.
Customer's bank transfers the amount to otheraccount if it is in the same bank, otherwise
the transfer request is forwarded to an ACH (AutomatedClearing House) to transfer the
amount to other account and the amount is deducted from the

customer's account. Once the amount is transferred to other account, the customer is
notified of the fund transfer by the bank.conventional paper cheque. Because the cheque
is in an electronic format, it can be processed in fewer steps and has more security
features than a standard paper cheque. Security features provided byelectronic cheque
include authentication, public key cryptography, digital signatures and encryption,among
others.

The e-Cheque is compatible with interactive web transactions or with email and does not
depend on real-time interactions or on third party authorizations. It is designed to work
with paper cheque practices and systems, with minimum impact on payers, payees, banks
and the financial system. Payers and payees can be individuals, businesses, or financial
institutions such as banks.

E- Cheques are transferred directly from the payer to the payee, so that the timing and
the purpose of the payment are clear to the payee.

The payer writes an e-Cheque by structuring an electronic document with the

information legally required to be in a cheque and digitally signs it.

The payee receives the e-Cheque over email or web, verifies the payer's digital
signature, writes out a deposit and digitally signs it.

The payee's bank verifies the payer's and payee's digital signatures, and then forwards
the cheque for clearing and settlement.

The payer's bank verifies the payer's digital signature and debits the payer's account.
 (Or)

b) what are security protocols ? Explain the various two types of

security protocols are used to provide security on transaction ?

Security Protocols

4.8.1 Secure Sockets Layer (SSL)

The Secure Sockets Layer (SSL) protocol, developed by Netscape Communications, is a

nonproprietary protocol commonly used to secure communication on the Internet and the
Web.6, 7.SSL is built into many Web browsers, including Netscape Communicator,
Microsoft Internet Explorer and numerous other software products. It operates between
the Internet’s TCP/IP communications protocol and the application software. In a
standard correspondence over the Internet, a sender’s message is passed to a socket
(which transmits information in a network); the socket interprets the message in
Transmission Control

Protocol/Internet Protocol (TCP/IP).

TCP/IP is the standard set of protocols used for communication between computers on
the Internet. Most Internet transmissions are sent as sets of individual message pieces,
called packets. At the sending side, the packets of one message are numbered
sequentially, and error-control information is attached to each packet. TCP/IP routes
packets to avoid traffic jams, so each packet might travel a different route over the
Internet. At the receiving end, TCP/IP makes sure that all of the packets have arrived,
puts them in sequential order and determines if the packets have arrived without
alteration. If the packets have beenaltered, TCP/IP retransmits them.

4.8.2 Secure Electronic Transaction(SET)

The Secure Electronic Transaction (SET) protocol, developed by Visa International and

MasterCard, was designed specifically to protect e-commerce payment transactions.9, 10

SET uses digital certificates to authenticate each party in an e-commerce transaction,
including

the customer, the merchant and the merchant’s bank. Public-key cryptography is used to
secure

information as it is passed over the Web.

Merchants must have a digital certificate and special SET software to process
transactions.

Customers must have a digital certificate and digital wallet software. A digital wallet is
similar to a real

wallet; it stores credit (or debit) card information for multiple cards, as well as a digital
certificate

verifying the cardholder’s identity.

Digital wallets add convenience to online shopping; customers no longer need to reenter
their

credit-card information at each shopping site.11 When a customer is ready to place an

order, the

merchant’s SET software sends the order information and the merchant’s digital
certificate to the

customer’s digital wallet, thus activating the wallet software.

The customer selects the credit card to be used for the transaction. The credit-card and
order

information are encrypted by using the merchant’s bank’s public key and sent to the
merchant along

with the customer’s digital certificate. The merchant then forwards the information to the
its bank to process the payment.
Only the merchant’s bank can decrypt the message, since the message was encrypted
using the bank’s public key. The merchant’s bank then sends the amount of the purchase
and its own digital

certificate to the customer’s bank to get approval to process the transaction. If the
customer’s charge is approved, the customer’s bank sends an authorization back to the
merchant’s bank.

The merchant’s bank then sends a credit-card authorization to the merchant. Finally, the
merchant sends a confirmation of the order to the customer.

4.9 Network Security

4.9.1 Firewalls

A basic tool in network security is the firewall. The purpose of a firewall is to protect a
local area network (LAN) from intruders outside the network.

Each LAN can be connected to the Internet through a gateway, which usually includes a
firewall. For years, one of the biggest threats to security came from employees inside the
firewall. Now that businesses rely heavily on access to the Internet, an increasing number
of security threats are originating outside the firewall—from the hundreds of millions of
people connected to thecompany network by the Internet.

A firewall acts as a safety barrier for data flowing into and out of the LAN. the need for
securityversus the need for functionality.

There are two main types of firewalls:

1. packet-filtering firewalls

2. Application-level gateways.

A packet-filtering firewall examines all data sent from outside the LAN and
automatically rejects any data packets that have local network addresses.

The goal of an application-level gateway is to screen the actual data. If the message is
deemed safe, then the message is sent through to the intended receiver.
4.9.2 Kerberos

Firewalls do not protect you from internal security threats to your local area network.
Internal attacks are common and can be extremely damaging. Kerberos is a freely
available, open-source protocol developed at MIT. It employs symmetric

secret-key cryptography to authenticate users in a network and to maintain the integrity

and privacy of network communications. Authentication in a Kerberos system is handled
by a main Kerberos system and a secondary Ticket Granting Service (TGS).

The main Kerberos system authenticates a client’s identity to the TGS; the TGS
authenticates client’s rights to access specific network services. Each client in the
network shares a symmetric secret key with the Kerberos system.

This symmetric secret key may be used by multiple TGSs in the Kerberos system. The
client starts by entering a login name and password into the Kerberos authentication
server. The authentication server maintains a database of all clients in the network. The
authentication server returns a Ticket-Granting Ticket (TGT) encrypted with the client’s
symmetric secret key that it shares with the authentication server.

Symmetric secret key isknown only by the authentication server and the client, only the
client can decrypt the TGT, thus authenticating the client’s identity. Next, the client sends
the decrypted TGT to the Ticket Granting Service to request a service ticket. The service
ticket authorizes the client’s access to specific network services. Service tickets have a set
expiration time. Tickets may be renewed by the TGS.

15. a) Describe the legal issues in privacy on the

internet?

Legal Issues: Privacy on the Internet

Right to Privacy
The right of the people to be secure in their persons, houses, papers, and effects, against
unreasonable searches and seizures, shall not be violated, and no Warrant shall issue, but
upon probable cause, supported by Oath or affirmation, and particularly describing the
place to be searched, and the
person or things to be seized.

5.1.1.2 Internet and the Right to Privacy

The Internet is currently a self-regulated medium

the Internet industry essentially governs itself. This condition enables the Internet to
flourish without the constraints of legislation, but it also creates problems because there
are few specific guidelines to follow.Many Internet companies collect users’ personal
information as the users navigate through asite.

While privacy advocates argue that these efforts violate individuals’ privacy rights,
online marketers and advertisers disagree; they suggest that, by recording the likes and
dislikes of online consumers, online companies can better serve their users.
For example, if you visit an online travel site and purchase a ticket from Boston to
Philadelphia, the travel site might record this transaction. In the future, when a ticket goes
on sale for the same flight, the Web site can notify you.

Network Advertising Initiative

In an effort to support self-regulation, the FTC approved the Network Advertising

Initiative (NAI) in July 1999. NAI currently represents 90 percent of Web advertisers,
including DoubleClick and 24/7Media.The group was established to determine the proper
protocols for managing a Web user’s personal information on the Internet. While the
Initiative prohibits the collection of consumer data from medical and financial sites, it
allows the combination of Web-collected data and personal information.
However, it has also taken steps to dictate how this information should be collected,
including issues of user notification and allowing users access to their own records.
Opponents to the NAI argue that what may appear to be good self-regulation to one
group may be a violation of privacy to another.

5.1.1.4 Employer and Employee

Many businesses monitor employee activities on corporate and communications

equipment. Oneof the newest surveillance technologies, keystroke cops, are creating
tension between employers and employees. Keystroke software provides an inexpensive,
easy-to-use method of monitoring productivity and the abuse of company equipment.
Products such as Computer Usage Compliance Survey, from Codex Data System , allow
business owners to create a custom user’s policy to define how the company will monitor
Web surfing, e-mailing, visits to restricted sites, downloading of inappropriate images
and use of encryption.

5.1.1.5 Protecting Yourself as a User

Users are able to take on falsified identities, pseudonymity, or use software to maintain
anonymity on the Web. The Worldwide Web Consortium is introducing the Platform for
Privacy

Preferences Project (P3P).

The Consortium will release a questionnaire to users who have downloaded a newer
version of the more popular browsers (e.g., Netscape Navigator and Internet Explorer)
asking individual users about the level of privacy they desire. The P3P privacy policies
are XML-based applications. This system allows the user’s preferences to be matched
accurately to the site’s standardized privacy protocols. While it will prompt users if the
privacy policy of a particular Web site does not match the users’ given preferences, it
does not enforce Web sites to abide by their own policies
5.1.1.6 Protecting Your Business: Privacy Issues

It is important to include a privacy policy on your Web site, respect the stated policy and
treat your visitors’ information with care. This means conducting regular audits to know
exactly what information is being collected through your site. There are several services
available over the Web that can generate a privacy policy according to your needs.

(Or)

b)Discuss in detail the taxation for the internet transaction and

Encryption process?

Introduction on Taxation
Electronic Commerce (“Ecommerce”) presents unique challenges to federal and state tax
authorities. Ecommerce involves commerce using the Internet: typically purchases and
sales through computers. Because Ecommerce involves computers communicating with
each other at the speed of light, transactions are both instantaneous and largely
anonymous. In contrast, mail order and telephone solicitation, two traditional forms used
by remote sellers, involve the delivery of goods from a specific physical location to a
specific location by means of a common carrier.

Although states and local jurisdictions have wrestled with the issue of collecting taxes
from out-of-state mail order sellers and telephone solicitors for decades, the internet
allows almost any small business to sell to customers in different states and countries.

The concept of taxation involves jurisdiction. From the Boston Tea Party Rebellion in
which tea was taxed as it physically landed on American shores, to sophisticated concepts
 in international taxation, a government’s authority to tax has always been based on
territory and jurisdiction. For instance, the U.S. government taxes its residents on their
world-wide income because they are connected with the U.S. through citizenship and
residency. Also, the U.S. taxes foreign individuals and businesses who are receiving
income from U.S. sources. But the U.S. cannot tax a foreign citizen who is not a U.S.
resident on earnings from a foreign source.

With the internet, a business can move to so-called tax haven jurisdictions and conduct
business outside the taxing jurisdiction of any country. Also, because of the speed in
which transactions occur and the absence of a traditional paper trail, especially with
intangible property transmitted by computer such as software, digital music or books and
services, it will be very difficult, if not impossible to apply traditional notions of
jurisdiction to tax these transactions.

While governments who rely on an income tax to fund themselves will have great
difficulty taxing Ecommerce, states and local jurisdictions that rely on sales and property
taxes to fund their operations are in steep trouble. As discussed below, the U.S.
constitution requires a sufficient physical connection with the state or local jurisdiction
by a company to burden the business with a tax obligation, and merely selling property,
services or goods to a customer who resides in a state is not sufficient nexus.

In short, it will take a Constitutional amendment to change the commerce clause, and it
extremely doubtful that U.S. citizens will vote to tax themselves on internet transactions.
In fact, outside of pressure from state and local tax authorities, there is little ground swell
for internet taxation by politicians. According to a Gallup Poll, 73% of active internet
users oppose an internet sales tax, compared to 14% in favor (Source: San Francisco
Chronicle, September 15, 1999, page D2). According to 36% of the respondents who use
the internet, they would be less likely to vote for a politician who voted to tax internet
transactions. But brick and mortar retailers who sell their products in physical locations,
contend that internet taxes are needed to equalize the tax burden for competitive reasons.

Some of the unique features of Ecommerce include:

 Computer-to-Computer transactions without a paper trail;

 Anonymous transactions, especially if a new form of electronic cash takes hold;
 Lack of information on the location of the seller and purchaser;
 Electronic delivery of goods (books, CDs and movies in electronic form) and services
(brokerage or accounting services); and
 Bundling of taxable and non-taxable items, such as taxable goods with taxexempt
 services.

Discriminatory Taxes

Multiple Taxes
Exceptions to ITFA transactions.
Taxation of Ecommerce - The Significant Issues
Will Ecommerce Really Erode the Tax Base for States and Localities

Taxation and Encryption Policies

The Future for Ecommerce Taxation

The Commission on Electronic Commerce, created by the ITFA legislation, has not been
able to make any headway in the taxation debate, but several members have voice
support for Internet taxes, provided the tax is simple to calculate for businesses. This
could mean a uniform tax rate agreed to by all the states, or technological advances that
would allow businesses to calculate the sales tax simply and without a large investment in
time and resources.

Unfortunately, the current state and local tax systems, which number close to 7,500
throughout the U.S., are notoriously parochial minded when it comes to defending their
jurisdiction. In Texas alone, there are more than 1,300 separate sales tax jurisdictions.
These numbers could be significantly increased if states and local jurisdictions were
allowed to tax Ecommerce.

Small businesses would be buried in costly paperwork attempting to comply with all
these rules. That is precisely why the commerce clause in the Constitution prohibits taxes
and is an undue burden on interstate commerce.

Encryption policy:
 Encryption is a technique for hiding data. The encrypted data can be read only by those
users for whom it is intended. Nowadays various encryption techniques are available.
One of the available techniques commonly used for encryption is Public Key. In Public
Key encryption system, RSA Data Security of Redwood City offers the most popular and
commercially available algorithm.

In a Public Key encryption system each user has two keys-public key and private key.
The encryption and decryption algorithms are designed in a way so that only the private
key can decrypt data that is encrypted by the public key. And the public key can decrypt
data, encrypted by the private key. Therefore, one can broadcast the public key to all
users.

Computer encryption is based on the science of cryptography, which has been used
throughout history. Before the digital age, the biggest users of cryptography were
governments, particularly for military purposes.

Most computer encryption systems belong in one of two categories. Broadly speaking,
there are two types of encryption methods:

 Secret-key cryptography
 Public-key cryptography

Data Encryption Standard (DES)

A widely-adopted implementation of secret-key cryptography is Data Encryption

Standard (DES). The actual software to perform DES is readily available at no cost to
anyone who has access to the Internet. DES was introduced in 1975 by IBM, the National
Security Agency (NSA), and the National Bureau of Standards (NBS) (which is now
called NIST). DES has been extensively researched and studied over the last twenty years
and is definitely the most well-known and widely used cryptosystem in the world. DES is
secret-key, symmetric cryptosystem: When used for communication, both sender and
receiver must know the same secret key, which is used both to encrypt and decrypt the
message. DES can also be used for single user encryption, for example, to store files on a
hard disk in encrypted form. In a multi-user environment, however, secure-key
distribution becomes difficult; public-key cryptography, discussed in the next subsection,
was developed to solve this problem.
DES operates on 64-bit blocks with a 56-bit secret key. Designed for hardware
implementation, it operation is relatively fast and works well for large bulk documents or
encryption. Instead of defining just one encryption algorithm, DES defines a whole
family of them. With a few exceptions, a different algorithm is generated for each secret
key. This means that everybody can be told about the algorithm and your message will
still be secure. You just need to tell others your secret key a number less than 256. The
number 256 is also large enough to make it difficult to break the code using a brute force
attack (trying to break the cipher by using all possible keys). DES has withstood the test
of time. Despite the fact that its algorithm is well known, it is impossible to break the
cipher without using tremendous amounts of computing power.

A new technique for improving the security of DES is triple encryption (Triple DES),
that is, encrypting each message block using three different keys in succession. Triple
DES, thought to be equivalent to doubling the key size of DES, to 112 bits, should
prevent decryption by a third party capable of single-key exhaustive search. Of course,
using triple-encryption takes three times as long as singleencryption DES. If you use DES
three times on the same message with different secret keys, it is virtually impossible to
break it using existing algorithms.. Over the past few years several new, faster symmetric
algorithms have been developed, but DES remains the most frequently used.

Customer’s Trust Online

Presentation

The look of a site conveys a sense of personality and influences the degree to which
visitors are prepared to trust the site owner. If an organisation already has a corporate
identity then the site should be consistent with this. On-screen design and copy styles
should reflect existing printed literature. A company’s colours may need re-working
online, to a new palette that is fast to download to the computer screen. Developing a
brand to work online is a new task. The internet is tactile - web pages should look, sound
and move in ways that reinforce the company’s existing image.

Navigation

If customers walk into a new high street shop they can usually find their way around.
There are conventions for laying out a shop and customers unconsciously understand and
 follow them. Online conventions are still being developed. Therefore, some judgement
will be needed to make first-time visits successful.

The challenge is to create enticement – to explore the store - without customers getting
lost. On the home page a site’s purpose must be clear to the first-time visitor. Use simple
words to describe the site’s content and make it easy for visitors to find what they are
looking for by giving clear instructions.

Fulfilment

Goods have now been selected and your customer has made it to the checkout. At this
point most shopping carts are abandoned. Websites can keep customers’ trust by taking
them through a transparent transaction process. At all times customers should know
where they are in the checkout process and they should be able to find out what happens
later. It must be easy to see: How orders are to be processed The company’s returns
policy. Online and offline customer support services The company’s security policy for
personal information. If you have shops on the high street, give customers the option to
return goods there. And remember to train your staff to handle returned online orders.

Familiar Names & Logos

Names that we know and trust are familiar and friendly. If we see them on a website we
trust the website more. Customers trust sites where they can see the familiar logos of
credit card brands, major software companies and web security organizations. If your
company is trusted by these organizations, don’t hide it. Should your company have a
familiar name, use it to build customer expectation of the site’s content, the quality of
products and the level of service support. Web customers will have higher service
expectations than offline customers. They may expect service delivered in real time, with
transparency and, above all, with consistency.

Technology

Too much technology can be daunting. Use technology as a transparent aid to navigation
and activity. Aim for graphics and functions in proportion to your customer’s needs.
These needs will change with your customer’s experience. Are you handling visitors new
to the web trade or devotees?

 Newcomers need signposts and easy navigation.

 Old hands need quick routes to every part of the site.

Younger visitors and technically aware customers may be more tolerant of higher
technical demands. Make sure that technology supports your sales process and does not
obscure it: Automatically recognise returning customers Help to complete forms correctly
Design forms to work with software programs that automatically add user details to the
form

Steps to Plan Successful E-Commerce

Respond Fast

If the plan is to respond to customer wishes, then the most successful plan will be the one
that responds fastest. This means that every component of the plan should be built with
the intention of proving a principle. Ask yourself if your customers want this? If they do,
then a more robust version can be built. If they don’t, then you can redirect your time and
resources and use the knowledge gained to good effect elsewhere.

Test out Your Plan

In the online marketplace everything is a test until it’s proven by the customer.
Successful testing follows a simple rule:

Test one Thing at a Time

Only test changes that can be measured directly. If a test includes more than one change,
it’s almost always impossible to measure the effect of each one. Test to learn from the
customer and to improve one step at a time.

Challenge Internal Assumptions

Remove internal processing costs to make dramatic improvements to profit margins.

Analyse each sales process to clarify what it is that staff spend time doing. In particular,
look for processes in which information is transferred. How many steps can be eliminated
by outsourcing tasks to your customers and suppliers? Who is best placed to make the
original information entry? Can that information be shared to avoid reentering the same
information? What information could customers, suppliers and distributors find for
themselves, computer to computer? With the time saved, what could your staff do to add
more value for customers?Focus on Customer, Supplier & Distributor Benefits
 What’s in it for customers, suppliers and distributors? Have you asked what they’d like?
The web’s very good at research. Are you offering them a new way to use an existing
service or a completely new service? Is it faster, cheaper, more convenient or just new
and online? What new information do they get? Decide what you can reliably offer each
group now and plan a phased introduction of more complex services. Complexity often
arises from integrating tried and tested stand-alone services.

Give Good Reasons to Use Online Services

Not all customers will automatically move to an online service simply because it’s there.
Equally, in a service’s early stages it may not make good sense to risk overwhelming a
new online channel by quickly moving large numbers of customers over to the new
service.

If you prefer customers to use an online channel, find ways to: Inform them that it is there
(they may not know this) Tell them how to change over Incentivise the swap to make it
worthwhile Introduce the new service as a special privilege beta test programme

Calculate the Three Sets of Costs

Very few organisations have all the resources in-house to start offering online services.
There are three sets of costs that should be calculated:

Current company costs that will be altered by the online changes both internal and external
costs

1. Cost to implement the changes interim support may be needed training for staff whose
tasks change
2. New cost assumptions, post cha nge

long-term cost-savings

long-term outsourcing arrangements

ongoing online development plans

Help Staff Adapt to Online Working

An online service will affect your staff and the work that they do. If your organization is
typical, there will be a progressive transfer from processing tasks towards customer
service. Some may find this work more fulfilling; others will not enjoy the increased
interaction with customers. Unless a company’s online services are entirely online, staff
who is to fulfil new service roles will require assistance to develop new skills. They will
almost certainly require some training in how to make the most of the new technology for
the benefit of their customers

PART-C (1 X 15 = 15 Marks)

16. a) write short notes on the following

(i) E-cash

Electronic money is paperless cash. This money is either stored on a card itself or in an
account associated with the card. The most common examples are transit cards, meal
plans, and PayPal. E-Cash can also mean any kind of electronic payment. Electronic
payment systems come in many forms including virtual cheques, ATM cards, credit
cards, and stored value cards. The usual security features for such systems are privacy,
authenticity and no repudiation.

Conceptual Framework

There are four major components in an electronic cash system:

1. Issuers
2. Customers
3. Merchants or traders
4. Regulators.

Issuers can be banks, or non-bank institutions

customers are referred to users who spend E-Cash
Merchants and traders are vendors who receive E-Cash
 regulators are defined as related authorities or state tax agencies

E-Cash transaction to occur, we need to go through at least three stages:

Account Setup: Customers will need to obtain E-Cash accounts through certain issuers.
Merchants who would like to accept E-Cash will also need to arrange accounts from
various

E-Cash issuers. Issuers typically handle accounting for customers and merchants.
Purchase: Customers purchase certain goods or services, and give the merchants tokens
which represent equivalent E-Cash. Purchase information is usually encrypted when
transmitting in the networks.

Authentication: Merchants will need to contact E-Cash issuers about the purchase and the
amount of E-Cash involved. E-Cash issuers will then authenticate the transaction and
approve the amount E-Cash involved.

The customer approaches his issuer(bank’s) site for accessing his account. The issuer
in return issues the money in form of a token which is generally in form of tens and
hundreds or as per specified by the customer.

In second phase the customer will endorse those tokens to the merchant for acquiring
services, for which the customer will authenticate the payment for the trader.
In third phase the trader will approach the token issuer(customer’s bank) and after
authenticating the tokens the issuing bank will convert the tokens into electronic fund and
the same will be transferred into trader’s account.
Finally after getting the payment for the respective services the trader provides the
requisite service or product and also notifies the customer about the approval of payment
made by customer in trader’s account.

E-cash security
Security is of extreme importance while handling the online transactions. Faith in the
security of the medium of exchange, whether paper or digital, is essential for the
economy to function. E-cash is much secure than other online payment modes because in
this case no credential such as card-passwords or anything such is involved. Its like
simply the online fund transfer from customer’s account to trader’s account.

(ii) E- cheque

A form of payment made via the internet that is designed to perform the same function as
a conventional paper cheque. Because the cheque is in an electronic format, it can be
processed in fewer steps and has more security features than a standard paper cheque.
Security features provided by electronic cheque include authentication, public key
cryptography, digital signatures and encryption, among others.

The e-Cheque is compatible with interactive web transactions or with email and does not
depend on real-time interactions or on third party authorizations. It is designed to work
with paper cheque practices and systems, with minimum impact on payers, payees, banks
and the financial system. Payers and payees can be individuals, businesses, or financial
institutions such as banks.

E- Cheques are transferred directly from the payer to the payee, so that the timing and
the purpose of the payment are clear to the payee.
The payer writes an e-Cheque by structuring an electronic document with the
information legally required to be in a cheque and digitally signs it.
The payee receives the e-Cheque over email or web, verifies the payer's digital
signature, writes out a deposit and digitally signs it.
The payee's bank verifies the payer's and payee's digital signatures, and then forwards
the cheque for clearing and settlement.
The payer's bank verifies the payer's digital signature and debits the payer's account.

PAYER PROCESS
 In order to send a cheque, the client simply fills out a standard e-cheque. The system
allows clients to define common payees in order to speed the e-cheque creation process.

When the cheque has been written it can be easily transferred from the payer to the
payee over a secure e-cheque channel.

PAYEE PROCESS
When the payee receives the e-cheque he can open and view it using the e-cheque
system.
In order to deposit the cheque, the payee simply connects to the bank (which is
expected to provide e-cheque services) and uploads the e-cheque to his bank account.
Once the bank receives the e-cheque, it will decrypt it using the e-cheque system.
After clearing (i.e. verifying both the cheque signature and account balance) with the

(iii) E-wallets

To facilitate the credit-card order process, many companies are introducing electronic
wallet services. E-wallets allow you to keep track of your billing and shipping
information so that it can be entered with one click at participating merchants’ sites. E-
wallets also store e-checks, e-cash and your credit-card information for multiple cards.
Credit-card companies, such as Visa, offer a variety of e-wallets Some Visa e-wallets are
cosponsored by specific banks;

for example,

the SBI is available to Bank One customers for use with only a Visa/Mastercard credit or
check card. MBNA offers an e-wallet that allows the consumer to perform one-click
shopping at member sites. Its e-wallet automatically fills in transfer, shipping and
payment information on the forms of non member merchants. There are many digital
wallets on the market that are not accepted by all vendors. Visa, MasterCard and a group
of e-wallet vendors have standardized the technology with the Electronic
Commerce Modeling Language (ECML).

( iv) micro payment system

4.5 Micro payment systems

Merchants must pay a fee for each credit-card transaction that they process; this can
become costly when customers purchase inexpensive items. The cost of some items could
actually be lower than the standard transaction fees, causing merchants to incur losses.
Micropayments, or payments that generally do not exceed $10, offer a way for nominally
priced products and services (music, pictures, text or video) to be sold over the Web.
Micropayments, some companies have formed strategic partnerships with utility
companies.
For instance, a phone bill is essentially an aggregation of micropayments that are charged
at the end of a particular period of time in order to justify the transaction fees. The
eCharge system gives companies the ability to offer this option to their customers.
eCharge uses ANI (Automatic Number Identification) to verify the identity of the
customer and the purchases they make. The eCharge software can only be used with a
dial-upconnection. In order for your payments to be charged to your phone bill, a 1-900
number must be called. eCharge temporarily disconnects the user from the Internet to do
this. Once the payment is complete, the user is reconnected.

4.6 Internet security

The explosion of e-business and e-commerce is forcing businesses and consumers to

focus on
Internet security. Consumers are buying products, trading stocks and banking online.
They are providing their credit-card numbers, social-security numbers and other highly
confidential information through

Web sites. Businesses are sending confidential information to clients and vendors over
the Internet. At the same time, we are experiencing increasing numbers of security
attacks. Individuals and organizations are vulnerable to data theft and hacker attacks that
can corrupt files and even shut down e-businesses. Security is fundamental to e-business.
Modern computer security addresses the various problems and concerns of protecting
electronic communications and maintaining network security.
There are four fundamental requirements of a successful, secure transaction:
1. privacy,
2. integrity,
3. authentication
4. nonrepudiation.
The privacy issue is the following: How do you ensure that the information you transmit
over the Internet has not been captured or passed on to a third party without your
knowledge? The integrity issue is the following: How do you ensure that the information
you send or receive has not been compromised or altered?
The authentication issue is the following: How do the sender and receiver of a message
prove their identities to each other? The nonrepudiation issue is the following: How do
you legally prove that a message was sent or received

(Or)

b)What is social media marketing ? Discuss the guide lines for

using social media to promote your business?

Social media marketing is the use of social media platforms and websites to promote a
product or service.
[1] Although the terms e-marketing and digital marketing are still dominant in academia,
social media marketing is becoming more popular for both practitioners and researchers

.[2] Most social media platforms have built-in data analytics tools, which enable
companies to track the progress, success, and engagement of ad campaigns. Companies
address a range of stakeholders through social media marketing, including current and
potential customers,

current and potential employees, journalists, bloggers, and the general public. On a
strategic level, social media marketing includes the management of a marketing
campaign, governance, setting the scope (e.g. more active or passive use) and the
establishment of a firm's desired social media "culture" and "tone."

Social networking websites

Social networking websites allow individuals, businesses and other organizations to

interact with one another and build relationships and communities online. When
companies join these social channels, consumers can interact with them directly.

[3] That interaction can be more personal to users than traditional methods of outbound
marketing and advertising.

[4] Social networking sites act as word of mouth or more precisely, e-word of mouth. The
Internet's ability to reach billions across the globe has given online word of mouth a
powerful voice and far reach. The ability to rapidly change buying patterns and product
or service acquisition and activity to a growing number of consumers is defined as an
influence network

.[5] Social networking sites and blogs allow followers to "retweet" or "repost" comments
made by others about a product being promoted, which occurs quite frequently on some
social media sites.
[6] By repeating the message, the user's connections are able to see the message,
therefore reaching more people. Because the information about the product is being put
out there and is getting repeated, more traffic is brought to the product/company

.[4]
In 2014, over 80% of business executives identified social media as an integral part of
their business.

[7] Business retailers have seen 133% increases in their revenues from social media
marketing.

Mobile phones
More than three billion people in the world are active on the Internet. Over the years, the
Internet has continually gained more and more users, jumping from 738 million in 2000
all the way to 3.2 billion in 2015.

[9] Roughly 81% of the current population in the United States has some type of social
media profile that they engage with frequently.

[10] Mobile phone usage is beneficial for social media marketing because of their web
browsing capabilities which allow individuals immediate access to social networking
sites. Mobile phones have altered the path-to-purchase process by allowing consumers to
easily obtain pricing and product information in real time

[11]. They have also allowed companies to constantly remind and update their followers.
Many companies are now putting QR (Quick
Mobile devices have become increasingly popular, where 5.7 billion people are using
them worldwide

[13]. This has played a role in the way consumers interact with media and has many
further implications for TV ratings, advertising, mobile commerce, and more.
Mobile media consumption such as mobile audio streaming or mobile video are on the
rise – In the United States, more than 100 million users are projected to access online
video content via mobile device. Mobile video revenue consists of pay-per-
view downloads, advertising and subscriptions. As of 2013, worldwide mobile phone
Internet user penetration was 73.4%. In 2017, figures suggest that more than 90% of
Internet users will access online content through their phones

[14]
Strategies
There are two basic strategies for engaging the social media as marketing tools:

Passive approach

Social media can be a useful source of market information and a way to hear customer
perspectives. Blogs, content communities, and forums are platforms where individuals
share their reviews and recommendations of brands, products, and services. Businesses
are able to tap and analyze the customer voices and feedback generated in social media
for marketing purposes;[15] in this sense the social media is a relatively inexpensive
source of market intelligence which can be used by marketers and managers to track and
respond to consumer-identified problems and detect market opportunities. For example,
the Internet erupted with videos and pictures of iPhone 6 "bend test" which showed that
the coveted phone could be bent by hand pressure. The so-called "bend gate" controversy

[16] created confusion amongst customers who had waited months for the launch of the
latest rendition of the iPhone. However, Apple promptly issued a statement saying that
the problem was extremely rare and that the company had taken several steps to make the
mobile device's case stronger and robust. Unlike traditional market research methods
such as surveys, focus groups, and data mining which are time-consuming and costly, and
which take weeks or even months to analyze, marketers can use social media to obtain
'live' or "real time" information about consumer behavior and viewpoints on a company's
brand or products. This can be useful in the highly dynamic, competitive, fast-paced and
global marketplace of the 2010s.
Active approach

Social media can be used not only as public relations and direct marketing tools but also
as communication channels targeting very specific audiences with social media
influencers and social media personalities and as effective customer engagement tools.

[15] Technologies predating social media, such as broadcast TV and newspapers can also
provide advertisers with a fairly targeted audience, given that an ad placed during a sports
game broadcast or in the sports section of a newspaper is likely to be read by sports fans.
However, social media websites can target niche markets even more precisely. Using
digital tools such as Google Adsense, advertisers can target their ads to very specific
demographics, such as people who are interested in social entrepreneurship, political
activism associated with a particular political party, or video gaming. Google Adsense
does this by looking for keywords in social media user's online posts and comments. It
would be hard for a TV station or paper-based newspaper to provide ads that are this
targeted (though not impossible, as can be seen with "special issue" sections on niche
issues, which newspapers can use to sell targeted ads).
Donald Trump ranks second with 25 million followers.

[19] Modi employed social media platforms to circumvent traditional media channels to
reach out to the young and urban population of India which is estimated to be 200
million.
Engagement
Engagement with the social web means that customers and stakeholders are active
participants rather than passive viewers. An example of these are consumer advocacy
groups and groups that criticize companies (e.g., lobby groups or advocacy
organizations). Social media use in a business or political context allows all
consumers/citizens to express and share an opinion about a company's products, services,
business practices, or a government's actions. Each participating customer, non-customer,
or citizen who is participating online via social media becomes a part of the marketing
department (or a challenge to the marketing effort). Whereas as other customers read
their positive or negative comments or reviews. Getting consumers, potential consumers
or citizens to be engaged online is fundamental to successful social media marketing

.[20] With the advent of social media marketing, it has become increasingly important to
gain customer interest in products and services. This can eventually be translated into
buying behavior, or voting and donating behavior in a political context. New online
marketing concepts of engagement and loyalty have emerged which aim to build
customer participation and brand reputation.

Campaigns

Local businesses

Small businesses also use social networking sites as a promotional technique. Businesses
can follow individuals social networking site uses in the local area and advertise specials
and deals. These can be exclusive and in the form of "get a free drink with a copy of this
tweet". This type of message encourages other locals to follow the business on the sites in
order to obtain the promotional deal. In the process, the business is getting seen and
promoting itself (brand visibility).
Small businesses also use social networking sites to develop their own market research
on new products and services. By encouraging their customers to give feedback on new
product ideas, businesses can gain valuable insights on whether a product may be
accepted by their target market enough to merit full production, or not. In addition,
customers will feel the company has engaged them in the process of co-creation—the
process in which the business uses customer feedback to create or modify a product or
service the filling a need of the target market. Such feedback can present in various
forms, such as surveys, contests, polls, etc.
Nike #MakeItCount

.
Purposes and tactics
One of the main purposes of employing social media in marketing is as a
communications tool that makes the companies accessible to those interested in their
product and makes them visible to those who have no knowledge of their products
.[26] These companies use social media to create buzz, and learn from and target
customers. It's the only form of marketing that can finger consumers at each and every
stage of the consumer decision journey

.[27] Marketing through social media has other benefits as well. Of the top 10 factors that
correlate with a strong Google organic search, seven are social media dependent. This
means that if brands are less or non-active on social media, they tend to show up less on
Google searches

.[28] While platforms such as Twitter, Facebook, and Google+ have a larger number of
monthly users, the visual media sharing based mobile platforms, however, garner a
higher interaction rate in comparison and have registered the fastest growth and have
changed the ways in which consumers engage with brand content. Instagram has an
interaction rate of 1.46% with an average of 130 million users monthly as opposed to
Twitter which has a .03% interaction rate with an average of 210 million monthly users.

[28] Unlike traditional media that are often cost-prohibitive to many companies, a social
media strategy does not require astronomical budgeting.